Amazon bids for 60% stake in India's Flipkart

The American e-tailing giant Amazon.com has made a formal offer to buy 60 per cent stake in Flipkart at a valuation which is on par with that of Walmart, a TV channel has reported. While talks in April were centered on Walmart acquiring a minority stake, sources told Bloomberg it could increase to between 50% and 60%.

If Walmart succeeded in buying Flipkart, the impact on Amazon could be intense price competition from a deep-pocketed competitor, retail consultants said.

It is learnt that the USA online retail giant is also seeking a non-compete clause that bars the current founders of Flipkart from operating in the same business for a period of around two years.

New Delhi:As Flipkart moves closer to ink a deal with Walmart, the Bengaluru-based ecommerce company has kept aside United States dollars 400 million (about Rs 2,600 crore) to acquire stocks from small investors as it wants to reclaim its private limited company status in Singapore, reportsthe Economic Times citing three people aware of the matter.

That's according to sources who spoke with CNBC-TV18 (via Reuters). The Walmart-Flipkart combine also has the potential to make a global entity, by replicating the model outside India as well.

However, a source clarified that while talks have been on for a while now, Walmart and some Flipkart investors, including Japan's SoftBank Group Corp., are yet to agree on the final details. The report noted the offer for the majority of Flipkart should be similar to what Walmart is offering to get a crack at the more than 1 billion consumers in the country. Softbank, Flipkart's main stakeholder, however, had some apprehensions over a deal with Amazon.

The company, which is based in Bangalore, is Amazon's biggest competitor in India, where the ecommerce market is forecast to hit $200 billion a year within a decade. Tiger Global and SoftBank are largest shareholders in Flipkart, holding 20% each in the company. The Amazon bid, the person said, is pegged at $22-23 billion.

Investors expect faster returns from Walmart's investments compared to Amazon, said Yarbrough, a move that limits the brick-and-mortar retailer's ability to spend big on acquisitions in growth markets.